Eicher Motors Q4 Results: Profit Nearly Halves As Lockdown Shutters Dealerships

Eicher Motors Ltd.’s quarterly profit fell as the nationwide lockdown that was imposed to contain the Covid-19 outbreak battered its already slowing sales.

Net profit of the maker of Royal Enfield motorcycles fell 44% year-on-year to Rs 304.3 crore in the quarter ended March, according to an exchange filing. That compares with the Rs 408-crore consensus estimate of analysts tracked by Bloomberg.

Its sales fell by a fifth over the year-ago period during the three months ended March. In March alone, sales volumes fell 41%, in line with its peers. That also hurt the company’s revenue, which dropped 11.7% to Rs 2,208 crore. Analysts had pegged the top line at Rs 2,171 crore.

India’s automakers have been struggling to revive sales for nearly two years. Increased upfront insurance costs, coupled with a broader consumption slowdown, and disruptions due to the stricter BS-VI emission norms hurt sales. Then the nationwide lockdown—which froze all but essential businesses—stalled operations for companies and shuttered dealerships.

“The last quarter of this fiscal was particularly challenging in the wake of the unprecedented coronavirus pandemic,” Eicher Motors said in a media statement. The company’s production facilities and dealerships were shut between March 23 and May 5, in consonance with government directives.

• Eicher Motors’ earnings before interest, tax, depreciation and amortisation declined 37% to Rs 432 crore.
• Ebitda margin contracted 780 basis points to 19.6%.

Eicher Motors has been witnessing a decline in margin for eight straight quarters.

Still, the company remains confident of a revival backed by customer interest and its BS-VI portfolio. “As the lockdown is easing out, we see strong initial customer interest and confidence,” Managing Director Siddhartha Lal was quoted as saying in the media statement.

The company has already resumed operations, and more than 90% of its retail network is now up and running, the statement said. It has also pledged a Rs 50-crore corporate social responsibility outlay for initial relief towards those affected by the lockdown.

Shares of the company rose 2.6% ahead of the results. That compares with a 0.72% gain in the NSE Nifty 50 Index.